Disability insurance is the type of coverage that safeguards the beneficiary’s earned income versus the risk that a disability creates an obstacle to completing essential work functions. In this quiz, you will be responsible for knowing things like which provision of long-term care policy is most important. Most of the quiz contains complex word problems about disability insurance. Don’t hesitate to take your certificate when you have finished the quiz.
$600
$ 5,000 / mo.
$ 5,600 / mo.
$6,200 / mo.
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$3,600
$5,000
$6,400
$10,000
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Re-establish a 3 month emergency fund.
Buy the best individual disability insurance policy available to her.
Establishing a budget and save at least 10% per year for retirement.
Buy a condo or house while mortgage interest rates are low.
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I
II
Both
Neither
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He has an own occupation policy
He has a loss of income policy
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None
Buy a new policy
Exercise his conditionally renewable provision
Sue his agent
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Client's earned income (W-2 or 1099s) and unearned income
Client's net worth
Client's existing disability coverage (including group coverage with ER).
Client's complete cash flow
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$600
$5,000 / mo.
$5,600 / mo.
$6,200 / mo.
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$3,600
$5,000
$6,400
$10,000
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Policy A because of its own occupation definition of total disability
Policy B because she is healthy and the premium will be substantially less over time.
Policy A because a good, stable job should allow her to begin self-insuring for disability.
Policy B because it has a 30-day wait and the premium will be substantially less over time.
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Coverage for Alzheimer's disease
Guaranteed renewable
Custodial care
Inflation protection
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Premiums paid are deductible in full.
Unreimbursed expenses are subject to 10%-of-AGI floor.
Premiums paid are included as fully deductible medical expenses subject to 10%-of-AGI floor.
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He has an own occupation policy.
A dual definition policy.
He has a loss of income policy
He has an any-occupation policy.
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Purchase a policy with increased benefits payable until age 65 but change the definition to any occupation
Purchase a policy with increased benefits payable until age 65 but increase the elimination period to 120 days
Purchase a policy with increased benefits payable to age 65 but change to a guaranteed renewable policy
Increase the benefits of the existing policy
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$600
$5,000 / mo.
$5,600 / mo.
$6,200 / mo.
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Tax-deductible premiums paid by the company, tax-free benefits to the employee.
Non-deductible premiums paid by the company, tax-free benefits to the employee.
Nondeductible premiums paid by the company, taxable benefits to the employee.
Tax-deductible premiums paid by the company, taxable benefits to the employee.
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If Terry becomes disabled, the disability benefits are taxable.
The company cannot deduct the premium.
The company can deduct the premium.
An informally funded incentive plan is typically funded with life insurance rather than disability insurance.
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$3,600
$5,000
$6,400
$10,000
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All of the above.
I
II
I, III
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I, III, IV
I, III, V
II, III
III, IV
III, V
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Medicare
Medicaid
Medicare supplement policy
Medigap insurance
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30-day elimination period, 3-year benefit period
60-day elimination period, 4-year benefit period
90-day elimination period, 6-year benefit period
180-day elimination period, 6-year benefit period
365-day elimination period, lifetime benefit period
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To pay the original premium
To lapse the policy
To buy a new policy at a cheaper premium.
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The benefits are tax-free to Vickie.
The benefits are taxable to Vickie.
The Corporation cannot deduct the premium.
The premiums paid by the corporation are not a tax consequence to Vickie.
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Definition - own occupation
Guaranteed renewable
Elimination period - 120 days
Benefit amount - 50% of salary
Benefit period - to age 65
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